DSME: Error in Songa Offshore’s FEED documents caused cost overruns

Daewoo Shipbuilding and Marine Engineering (DSME) is seeking arbitration in relation to three semi-submersible rigs it is building for Cyprus-based Songa Offshore as a result of errors in the latter’s front-end engineering and design (FEED) documents.

DSME told IHS Maritime that these errors have caused cost overruns and delays in construction work.

Songa Offshore said on 15 July that DSME has experienced significant delays and cost overruns in building the rigs, which are of the Cat-D design.

Songa Offshore said it believes that any attempt to recover cost overruns is of no merit, and will defend its position vigorously.

A DSME spokesman gave the shipbuilder’s side of the story to IHS Maritime on 20 July.

The spokesman said, “DSME is of the view that Songa is responsible for the delays and cost overruns, which DSME has experienced in construction of the four Cat-D rigs due to the errors in the FEED documents provided by Songa and other issues that DSME is not responsible for. In spite of DSME’s continuous efforts to resolve the disputes, the parties were unable to reach any amicable settlement as Songa has shown no willingness to engage in commercial negotiation to resolve the disputes. Thus, DSME had no option but to commence arbitration proceeding against Songa for the disputes that arose between the parties in connection with the construction of four rigs.”

IHS Maritime’s Sea-web.com shows that DSME is building the Songa Encourage, Songa Endurance, and Songa Enabler, which are due for delivery this month, August 2015, and February 2016.

The South Korean shipbuilder had already delivered another rig, Songa Equinox, to Songa Offshore in June. The four rigs are scheduled to be deployed to the Norwegian Continental Shelf to service eight-year contracts with Statoil.

The semi-submersible rigs were ordered in September 2011 and February 2012.

The DSME spokesman added, “Notwithstanding the above, DSME is devoted to perform its duties under contract to complete the remaining three rigs in accordance with the contracts. The rigs shall be completed and ready for delivery in accordance with its planned schedule.”

As the third anniversary of the entry into force of the Maritime Labour Convention 2006 (MLC) approaches, Seafarers’ Rights International (SRI) is embarking on a comprehensive study on the effectiveness of the Convention. The study has been commissioned by the International Transport Workers’ Federation. It will be an in-depth and... Read more →